The appointment of Dr. Ngobani Johnstone Makhubu as the new Commissioner of the South African Revenue Service (SARS) signals more than a leadership change — it signals intent.

Based on his previous approach to governance, enforcement, and fiscal discipline, South African employers could expect far less tolerance for “grey areas” and significantly greater scrutiny on payroll compliance.

If the new Commissioner’s track record is anything to go by, employers should prepare for a more disciplined, data-driven, and enforcement-led SARS where compliance is expected, not negotiated.

And for many organisations, that is where the real risk lies.

The Myth of “It’s Too Small to Matter”

For years, certain payroll practices have quietly persisted in the background, including but not limited to the following:

• Fuel cards not being taxed 
• Travel allowances loosely substantiated or provided to office-based employees
• Fringe benefits inconsistently applied 
• Employer-paid funeral cover not taxed 
• Gap cover company contributions ignored or misclassified
• Late Joiner penalty fees being classified as medical aid contributions
• “Creative” structuring to maximise net pay 

These are not always deliberate acts of non-compliance, but they are exposures.

Under a more enforcement-focused SARS, these are no longer rounding errors. They are audit triggers.

The reality is that what feels operationally insignificant can translate into material tax risk when applied across an entire workforce over time.

SARS Is Getting Smarter, And Faster

SARS has been steadily rebuilding its data capabilities, and under new leadership, this trajectory is unlikely to slow down.

We are already seeing:

• Increased use of third-party data matching 
• Greater integration between payroll submissions and employee tax filings 
• More targeted and frequent employer audits 

This means discrepancies, even small ones, do not stay hidden for long. A fuel card that is not taxed correctly, or a benefit coded incorrectly on payroll leave digital footprints. And SARS is following them.

The Real Risk: It is Not Just the Tax

Many employers underestimate the full impact of payroll non-compliance.

It is not just about underpaid PAYE, but about penalties and interest that compound quickly; reputational damage in an increasingly transparent environment; employee dissatisfaction when historical corrections hit their net pay; and operational disruption during audits and remediation exercises.

What starts as a “small” payroll oversight can quickly become a multi-year, multimillion-rand problem.

Fuel Cards, Fringe Benefits & the Danger Zone

Let us be direct: fuel cards are one of the most commonly misunderstood (and mismanaged) payroll items.

Whether provided for business travel or as part of a broader remuneration package, the tax treatment must be clear, consistent, and defensible.

The same applies to company cars, travel allowances, long-term “tax free” subsistence allowances and employer-paid benefits. 

If there is a personal benefit element, there is likely a tax implication.

Assuming otherwise — or hoping it goes unnoticed — is no longer a viable strategy.

A Shift in Mindset: From Reactive to Proactive

The appointment of Dr. Makhubu should be a catalyst for change — not panic, but proactive correction.

Leading organisations are already:

• Conducting payroll compliance reviews 
• Stress-testing their fringe benefit policies 
• Aligning payroll, tax, and HR interpretations 
• Investing in advisory and calculation tools 

This is because the cost of fixing issues before SARS asks questions is always lower than fixing them after.

Get Your House in Order

No doubt, the era of “sweep it under the rug” is over.

Under stronger leadership at SARS, enforcement will sharpen, expectations will rise, and tolerance for inconsistency will shrink.

Payroll is no longer just an administrative function, but a frontline compliance risk.

And in this new environment, the question is no longer if SARS will look — it is when.

Written by Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting SA